News Release

 

 

·●	Fiscal 2014 revenue decreased 12% to $2.1 billion, due to declines in product sales and gaming operations, partially offset by an increase in social gaming revenue.

·●	Fiscal 2014 adjusted earnings per share decreased 14% to $1.09.

·●	Free cash flow for the year decreased 67% to $111 million primarily due to the company's investment to extend land-based licensing rights for Wheel of Fortune® and Jeopardy! ® through 2024, as well as expand rights to include social gaming and online real-money wagering in the U.S.

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·●	Fourth quarter revenue decreased 13% to $216 million primarily due to installed base declines.

·●	Gross margin in the fourth quarter was consistent with the prior year quarter, as lower revenue was offset by lower depreciation.

·●	Installed base decreased 13% driven largely by declines in International primarily due to lease operation unit conversions and North America MegaJackpots® ("MJP"), most significantly in the standalone category.

·●	Average revenue per unit per day in the fourth quarter was $48.39, down slightly over the prior year quarter, driven by lower international MJP yields, partially offset by higher North America MJP yields.

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·●	Revenue decreased 25% to $234 million in the fourth quarter due to lower machine unit volume, as the prior year quarter benefited from 1,800 Canadian VLT units, 1,000 additional Illinois VLT units, and 4,600 video poker units under a large contract.

·●	Gross margin increased to 58% from 50%, while average machine sales prices increased to $12,600 in the fourth quarter due to a more favorable product mix.  Gross margin also benefited from higher intellectual property licensing revenue.

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·●	Social gaming revenue in the fourth quarter increased 22% to $75 million compared to the prior year quarter, driven by increases in both average DAU and bookings per DAU.  Mobile revenue comprised 36% of total bookings in the fourth quarter and increased 62% compared to the prior year period.

·●	Fourth quarter average DAU were 1.8 million, an increase of 7% over the prior year quarter.

·●	Fourth quarter average MAU were 5.7 million, a decrease of 15% compared to the prior year quarter, primarily due to increased marketing efforts to procure higher-quality players.

·●	Average bookings per DAU in the fourth quarter were $0.46, an increase of 15% over the same quarter last year.

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Fourth quarter operating expenses decreased 13% to $204 million compared to the prior year quarter primarily due to lower selling, general and administrative, research and development, and acquisition-related expenses, partially offset by higher impairment, restructuring, and merger-related charges.

·●	Selling, general and administrative, and research and development expenses decreased over the prior year quarter primarily due to cost savings resulting from the March 2014 business realignment.

·●	Adjusted operating expenses for the fourth quarter were 32% of revenue compared to 33% in the prior year quarter.

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·●	Operating cash flow was $138 million in the fourth quarter on net income of $71 million.

·●	Contractual debt obligations decreased $325 million due to the maturity of the company's $800 million convertible notes on May 1, 2014.

·●	Outstanding borrowings under the company's revolving credit facility were $525 million as of September 30, 2014.

·●	During fiscal 2014, the company returned $319 million in the form of dividends and share repurchases to its shareholders.

References to per share amounts in this release are based on diluted shares of common stock, unless otherwise specified.

IGT will not provide financial guidance for fiscal year 2015.  As previously announced, IGT has entered into a definitive merger agreement with GTECH S.p.A. for the acquisition of IGT by GTECH for $6.4 billion, comprised of $4.7 billion in cash and stock and the assumption of $1.7 billion in net debt.  The transaction is currently expected to be completed in the first half of calendar 2015.

There will be no earnings conference call.

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Q4 FY 2014 Excel file

Q4 FY 2014 PDF of this press release

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties.  These statements include our expected future financial and operational performance and our strategic and operational plans, as well as the expected timing of the closing of the proposed merger transactions with GTECH S.p.A. ("GTECH).  These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the results predicted, and reported results should not be considered an indication of future performance.  Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: general economic conditions and changes in economic conditions affecting the gaming industry; new or changing laws or regulations or new interpretations of existing laws or regulations affecting our business; difficulties or delays in obtaining or maintaining necessary licenses or approvals; slow growth in the number of new gaming jurisdictions or new casinos or the rate of replacement of existing gaming machines; changes in operator or player preferences for our products; our ability to compete in the gaming industry with new or existing competitors; our ability to develop and introduce new products and their acceptance by our customers; risks related to our international operations; our ability to protect our intellectual property; adverse results of litigation, including intellectual property infringement claims; our ability to leverage cost reduction initiatives; risks related to business combinations, investments in intellectual property and the integration of acquisitions; and future developments or changes affecting online gaming or social casino-style gaming, which is a new and evolving industry.

Additional factors relating to the proposed merger transactions with GTECH include failure to obtain applicable regulatory or securityholder approvals in a timely manner or otherwise; the possibility that the proposed transactions will not close, including by any failure to satisfy closing conditions or a termination of the merger agreement; risks that the businesses of IGT and GTECH will not be integrated successfully or that the combined companies will not realize estimated cost savings, value of certain tax assets, synergies and growth or that such benefits may take longer to realize than expected; failure to realize anticipated benefits of the combined operations of IGT and GTECH; risks relating to unanticipated costs of integration; ability to hire and retain key personnel; and the potential impact of announcement or consummation of the proposed transactions on relationships with third parties, including customers, employees and competitors.

A further list and description of these and other risks, uncertainties and other matters can be found in our annual report and other reports filed with the Securities and Exchange Commission, including under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for fiscal 2013 filed with the SEC on November 26, 2013 and our Quarterly Report on Form 10-Q for our fiscal quarter ended June 30, 2014 filed with the SEC on August 6, 2014 and available on the SEC website at www.sec.gov and on the investor

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relations section of our website at www.IGT.com/investors.  Additional information will also be set forth in our Annual Report on Form 10-K for our fiscal year ended September 30, 2014, which we expect to file with the SEC in the fourth quarter of calendar 2014.  All information provided in this release is as of November 6, 2014, and IGT does not intend, and undertakes no duty, to update this information to reflect subsequent events or circumstances.

Important Information for Investors and Securityholders

This communication is for informational purposes only and is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction pursuant to the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and applicable European regulations. Subject to certain exceptions to be approved by the relevant regulators or certain facts to be ascertained, the public offer will not be made directly or indirectly, in or into any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction, or by use of the mails or by any means or instrumentality (including without limitation, facsimile transmission, telephone and the internet) of interstate or foreign commerce, or any facility of a national securities exchange, of any such jurisdiction.

Georgia Worldwide PLC, a newly formed holding company ("NewCo"), has filed with the SEC a registration statement on Form F-4 (File No. 333-199096), which includes a proxy statement of IGT that also constitutes a prospectus of NewCo (the "proxy statement/prospectus"). INVESTORS AND SECURITYHOLDERS ARE URGED TO READ THE PRELIMINARY PROXY STATEMENT/PROSPECTUS, AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC, INCLUDING THE DEFINITIVE PROXY STATEMENT/PROSPECTUS, IN THEIR ENTIRETY CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT IGT, GTECH, NEWCO, THE PROPOSED TRANSACTIONS AND RELATED MATTERS. Investors and securityholders will be able to obtain free copies of the proxy statement/prospectus and other documents filed with the SEC by the parties through the website maintained by the SEC at www.sec.gov. In addition, investors and securityholders will be able to obtain free copies of the proxy statement/prospectus and other documents filed with the SEC on IGT's website at IGT.com within the "Investor Relations" section or by contacting Investor Relations at 866-296-4232 (for documents filed with the SEC by IGT) or on GTECH's website at gtech.com or by contacting Corporate Communications at 401-392-7452 (for documents filed with the SEC by NewCo).

The release, publication or distribution of this communication in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this communication is released, published or distributed should inform themselves about and observe such restrictions.

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Participants in the Distribution

IGT, GTECH and NewCo and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the securityholders of IGT in respect of the proposed transactions contemplated by the proxy statement/prospectus. Information regarding the persons who are, under the rules of the SEC, participants in the solicitation of the securityholders of IGT in connection with the proposed transactions, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in the proxy statement/prospectus filed with the SEC. Information regarding IGT's directors and executive officers is contained in IGT's Annual Report on Form 10-K for the year ended September 28, 2013 and its Proxy Statement on Schedule 14A, dated January 24, 2014, which are filed with the SEC and can be obtained free of charge from the sources indicated above.

IGT Resources:

About IGT:

IGT Contacts:

Kate Pearlman

Vice President, Investor Relations and Treasury

Cindy Klimstra

Director, Investor Relations

+1 866-296-4232

InvestorRelations@IGT.com

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CONSOLIDATED STATEMENTS OF INCOME (Unaudited and Condensed)

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CONSOLIDATED BALANCE SHEET (Unaudited and Condensed)

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CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited and Condensed)

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SUPPLEMENTAL DATA (Unaudited)

PRODUCT SALES

INTERACTIVE

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Reconciliations of GAAP to Non-GAAP Adjusted Financial Measures

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